Money Troubles – How to Spot Them and Avoid Money Problems

Posted on 3 October 2019

Written by Alan Spergel

Money Troubles 101

A wallet being squeezed shut by a C-Clamp, indicating money problems.If you’re not looking for the tell-tale signs, you might miss how big a money problem really is. If a debt problem is bigger than you bargained for, and you don’t act to solve it right away, it can get much worse. Understanding how fear can stop you from taking action when you’re afraid can help. When it comes to big money problems, sometimes understanding what your options are can make all of the difference. We understand that it’s easy to worry that asking for help might lead to bankruptcy. We want to help you get ahead of your money troubles so that you have other options to consider!

Based on 30 years of experience helping people get out of debt, we’ve created a list of “red flags”. Our red flags will help you identify whether or not you have a debt problem. Start exploring your finances and the many ways you can turn your money troubles into money triumphs.

Red Flag #1: Living in Overdraft

If you are in and out of overdraft and consistently paying overdraft interest and fees, this could be a sign that you’re having money troubles. Overdraft should always be a temporary measure; ongoing use of this privilege is not a good sign of financial wellness. In the end, “living in overdraft” may cost you money that could have gone into your savings account.

Red Flag #2: Paying Credit with Credit

If you use credit to pay off credit every month (paying your Mastercard off with your Visa, your line of credit with your overdraft, etc.) it’s a clear sign of trouble. Cash flow challenges should be sorted out quickly and long before your credit runs out. Don’t let a temporary income fluctuations become long-term money problems.

Red Flag #3: Paying Interest on Unpaid Debt

It’s a red flag if you have a lot of unpaid debt and are making minimum (interest-only) payments each month.  One of the most obvious signs of money problems. If left unpaid, your debts have the potential to skyrocket with interest that you can’t afford to pay off. The more interest you pay, the more you’ll pay overall for those debts you owe.

Man with money troubles pulling the lining of his empty pant pockets inside out to show nothing is there.Red Flag #4: Borrowing from Family and Friends

Routinely borrowing money for bills from family/friends is not wrong or bad, but it is a red flag you’re your budget and finances must be out of order. While it’s great to have support, small personal loans from people you know means that you must be “tapped out” at the bank. If you were to deal with your personal debt and seek the advice of a seasoned professional you could make major changes to your financial strategy. You can get ahead and get away from the cycle of borrowing from loved ones.

 Red Flag #5: Not Exploring Free Debt Help Sooner

If you are just starting to explore your free debt help now, good for you! Understanding your options, knowing you’re not alone and finding what inspires you to become debt free – is priceless. In the case of advice that will work for you, the cost truly is free. Licensed Insolvency Trustees provide free consultations, it’s that simple. We’ll review your debt problem and help you with your decision-making process. You’ll be asking yourself why you didn’t explore free debt help sooner – don’t worry we get this a lot!

But… Do I Really Have Money Problems? 

Canadian families have been facing rising levels of debt for years, so the answer in this country may be yes. The reality is, salaries are not going up but credit card and mortgage debt, tuition fees, and the cost of food is. According to Statistics Canada, the average household debt has been growing at a faster rate than in the past. Essentially, as a Canadian, you are more likely to have a debt problem now than your parents did at your age. Cost of living increases have been significant and many Canadians today spend more than they have.

Bankruptcy as a Possibility for Debt Freedom

The word 'bankrupt' spelled out in Scrabble tiles, indicating that bankruptcy (like a game) can be an energizing experience to solve money troubles.We understand the word ‘bankruptcy’ sounds scary to many people. On the other side of the coin, there are many people who have been through the process and think differently now. Bankruptcy can have an empowering context, as an opportunity to start over in the least amount of time. Bankruptcy also means the full support of a team of advisers to steer you in the right direction. Taking the fastest path to stopping the debt collectors who’ve been calling at all hours of the day, is a real power move.

The benefit of getting the help of a Licensed Insolvency Trustee (LIT) is choice. Bankruptcy will simply be – a possibility – if you want it that way. Your LIT will present you with a variety of financial solutions including (but not limited to), bankruptcy. A free consultation could even be as simple as working out how big your money troubles are – or if you’re just hitting a bump in the road. You can also explore how to reduce or eliminate your interest payments, resolve your money problems with a consumer proposal, and get rid of that nagging debt as fast as possible.

Get Back on Track – You Owe it to Yourself … and Your Family

Silhouette of a woman experiencing debt freedom for the first time, arms outstretched behind her, enjoying the sunrise. Money troubles are behind her. Life is challenging enough without the extra stress that comes with having a debt problem. Clearing up your debt problem will influence all of your financial decision-making. You’ll be able to regain your focus, find new energy and motivation to deal with financial matters and you’ll have more time to pay attention for the things that matter most in life (like your family).

Happy families are families that deal with stress in healthy ways. It’s important to recognize when you’re in over your head. Getting ahead of a problem is one of the best ways of reducing the impact it will have on your household over time.

Discover how great debt freedom feels.

You Owe it to Yourself.

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Alan Spergel

Alan Spergel is the founder and President of Spergel. A leader in our industry, he is also a former chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) and has served on Canada's Superintendent of Bankruptcy Management Board. He actively supports multiple charities, ensuring that Spergel gives back to our communities and has recently been appointed as Chairman of the Board of the Humber River Hospital Foundation. Outside of the boardroom, you can find Alan playing golf, tennis, or skiing and enjoying quality time with his grandchildren.

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